After a mediocre month for shares of
AMC Entertainment Holdings
both screamed higher on Tuesday, burning short sellers along the way.
stock (ticker: AMC) rose 24% to $43.09 while09
stock (GME) closed 10% to $191.18. Both booked their highest close since July 9. GameStop shares are still down 10.7% in the month so far, while AMC shares are down 24% in July, according to Dow Jones Market Data.
AMC and GameStop are the two main meme stocks, meaning their daily price movements are often unpredictable, having more to do with factors such as social media chatter, options quirks and momentum trading, and short-seller activity. Several analysts have dropped coverage of GameStop, arguing that it no longer trades on fundamentals.
Ihor Dusaniwsky, managing director at short-selling data provider S3 Partners, said: Barron’s he estimates that 75.8 million AMC shares are being sold short, or about 15% of the shares available for trading. There has been some coverage as he estimates that stocks that have been short have fallen by about 4 million in the past week. But with the stock rising $8.47 on Tuesday, short sellers fell $642 million in mark-to-market losses on Tuesday alone, bringing losses to date to $3.82 billion.
For GameStop, he estimates that about 7.9 million shares have gone short, or 14% of the shares available for trading, with about a million shares in the past week. Based on those numbers, short sellers fell $139.8 million on Tuesday, bringing losses so far to $6.32 billion.
AMC did give investors some news to chew on. Following Monday’s closure, the company said it would add two former Pacific Theaters locations in the Los Angeles area. It also said it is in talks with other property owners about adding more closed locations. Consolidation would be good for AMC, but bold assumptions would be needed to justify the stock’s current levels.
There was no such news for GameStop to justify the move, although chairman Ryan Cohen posted a photo of himself late Monday night with chopsticks in his nose with the caption ‘PG-13’. Reddit users have speculated wildly for months based on every emoji, GIF, and photo that the Chewy co-founder shared on Twitter.
What comes next for the meme stock is a guess. Wall Street pros have been calling for a crash for months, but meme stocks have held up, albeit with a lot of volatility. Ultimately, the companies will have to put their money to work and justify these high valuations. Just not yet, apparently.
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